By David on December 08th, 2007
Iran Drops The U.S. Dollar – Who Is Next?
It’s not like anyone did not see this coming, really…I just though that other countries would have started dropping the U.S. dollar earlier, seeing how it is so unstable lately. However, Iran has become the first to formally do so. There had been some big talk before about dropping the dollar, but why now would an oil-producing country not want to get paid in U.S. currency?
The fall of the dollar, which has weakened considerably against the euro and other currencies in the past 12 months, has affected the revenues of OPEC members because most of them price and sell their oil exports in the US currency.
So…who’s next?
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considering the u.s. trade sanctions and who iran trades with, makes a huge difference. iran dropping the dollar is of minor consequence for the u.s., especially since the u.s. does not import oil from iran anyways. moreover, it’s not like the u.s. is going to sell its big ticket items like airplanes, tanks, etc to iran.
as for other countries, i highly doubt the dollar will be dropped all out in favor of the euro or some other currency simply because the u.s. is the largest consuming economy. China and india increasing consumption with large u.s. currency reserves (especially china), dropping the dollar makes no sense for the major oil countries either.
the euro has appreciated against the dollar, but the ec’s economic fundamentals are not as good as the u.s. the near term, the u.s. dollar is taking a hit, but the u.s. still has one of the most resilient economies out there.
However, we do import oil from Chavez, and seeing as how he is best buddies with Iran, when will they drop the dollar?
Iran is of no importance. China is stuck between a rock and a hard place. If they drop the dollar, we are their BIGGEST clients. China is afraid of the ramifications.
Chavaz is a wise guy. Let’s see what happens.
with all of chavez’s rhetoric, he has yet to do anything when he could have already done so. he is heavily subsidizing gas (Venezuelans pay 7cents a gallon for gas) and other social projects, yet he can’t even win a referendum.
Kiplinger has a nice article about dropping the dollar
http://www.kiplinger.com/businessresource/forecast/archive/Time_for_a_Dollar_Turnaround_071212.html